Primeserv Group Limited HY 2014 results

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Primeserv Group Limited HY 2014 results

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Primeserv Group Limited HY 2014 results

  1. 1. GRAPHICULTURE MAJAA86M www.primeserv.co.za UNAUDITED RESULTS for the six months ended 30 September 2013
  2. 2. Condensed Consolidated Statement of Comprehensive Income Condensed Consolidated Statement of Changes in Equity for the six months ended 30 September 2013 Revenue – Continuing operations – Discontinued operations Cost of sales Gross profit – Continuing operations – Discontinued operations EBITDA – Continuing operations – Discontinued operations 321 465 1 460 359 751 19 323 340 428 704 674 49 781 654 893 Balance at beginning of the period 341 083 18 668 19 323 – 321 760 18 668 672 789 31 885 49 781 – 623 008 31 885 Adjustment for policy change (296 037) (16 853) (279 184) (592 364) (43 459) (548 905) 63 714 2 470 61 244 112 310 6 322 105 988 46 870 16 844 2 470 – 44 400 16 844 90 584 21 726 6 322 – 84 262 21 726 6 926 501 6 425 3 201 2 314 7 058 (132) 501 – 6 557 (132) 7 478 (4 277) 2 314 – (13) (1 457) (2 232) 322 925 (272 857) 50 068 51 370 (1 302) 7 661 9 663 (2 002) – Continuing operations – Discontinued operations 8 461 (2 002) Interest paid Impairment of assets – discontinued operations Share of profit/(loss) from associate Profit/(loss) before taxation Previously Reported Audited 31 March 2013 R’000 Restated Unaudited 30 Sept 2012 R’000 (1 202) Interest received Previously Reported Unaudited 30 Sept 2012 R’000 Unaudited 30 Sept 2013 R’000 Depreciation and amortisation Operating profit/(loss) for the six months ended 30 September 2013 6 459 725 (3 204) – – 3 980 (1 470) Adjusted Unaudited 30 Sept 2012 R’000 5 456 488 4 968 5 964 (508) 488 – 5 476 (508) 157 (747) 904 (2 886) (314) – – – 186 (2 572) – (186) Restated Unaudited Adjustment 31 March 31 March 2013 2013 R’000 R’000 969 7 234 (6 265) 992 (5 136) (1 203) – (22) 887 5 164 (4 277) (1 323) 2 292 – 4 942 (6 265) (1 464) – (31) Restated balance at beginning of period Attributable earnings Shares disposed Non-controlling shareholders’ interest Balance at end of period 1 723 1 203 31 5 982 (2 002) (4 378) 66 (4 444) 3 943 (1 216) (387) – 4 330 (1 216) 2 962 (7 340) 66 – 2 896 (7 340) 3 903 3 945 (387) 4 332 (4 274) 66 (4 340) 4 820 (875) (387) – 5 207 (875) 4 731 (9 005) 66 – 4 665 (9 005) Human Capital Development 3 655 5 657 (2 002) 4 340 – 4 340 (3 991) – (3 991) 5 215 (875) – – 5 215 (875) 5 014 (9 005) – – 5 014 (9 005) Revenue – inter-segment Total comprehensive income/(loss) 3 903 3 945 Net profit/(loss) attributable to shareholders 3 655 – Continuing operations – Discontinued operations Total comprehensive income attributable to: Ordinary shareholders of the Company – Continuing operations – Discontinued operations Non-controlling shareholders’ interest Reconciliation of headline earnings After-tax effect of profit on sale of fixed assets – continuing operations Impairment of assets – discontinued operations Headline earnings – Continuing operations – Discontinued operations Weighted average number of shares ('000) Diluted weighted average number of shares ('000) Earnings/(loss) per share and diluted earnings/(loss) per share (cents) – Continuing operations – Discontinued operations Headline earnings/(loss) and diluted headline earnings/(loss) per share (cents) – Continuing operations – Discontinued operations (77) 5 905 (2 002) 248 1 218 – 1 218 104 – 104 (387) (8) 4 332 (283) 66 66 (4 340) (3 991) – (3 991) – – – – (65) – (65) 3 655 – – – 1 203 – 1 203 4 340 – 4 340 (2 853) – (2 853) 5 215 (875) – – 5 215 (875) 4 949 (7 802) – – 4 949 (7 802) 93 682 3,90 6,04 (2,14) 3,90 6,04 (2,14) Human Capital Development Business segment operating profit results Human Capital Outsourcing 4 340 93 682 Human Capital Outsourcing (349) (4 274) – 5 657 (2 002) Human Capital Outsourcing Total (387) 4 340 – Revenue from external customers Total (395) 73 530 66 263 (3 820) (3 820) – 3 655 69 710 (3 820) 73 530 – 248 4 340 – 4 340 844 – 844 (395) (387) (8) 73 530 – 73 530 (3 820) (3 820) – 69 710 (3 820) 73 530 (3 991) – (3 991) 827 – 827 (283) 66 (349) 70 166 74 499 Unaudited 30 Sept 2013 R’000 Restated Unaudited 30 Sept 2012 R’000 Adjusted Unaudited 30 Sept 2012 R’000 Previously Reported Unaudited 30 Sept 2012 R’000 306 032 326 904 19 323 307 581 642 622 49 781 592 841 322 925 32 847 – 32 847 62 052 – 62 052 359 751 19 323 340 428 704 674 49 781 654 893 242 – – – – – – – 242 3 757 – 3 757 4 089 – 4 089 3 757 – 3 757 4 089 – 4 089 2 292 20 171 (4 207) 78 706 66 263 (3 754) 70 017 for the six months ended 30 September 2013 3 114 Total comprehensive income/(loss) 73 530 – Previously Reported Audited 31 March 2013 R’000 (3 672) (387) Taxation – 66 263 Restated Unaudited Adjustment 31 March 31 March 2013 2013 R’000 R’000 Segmental Analysis 2 727 – Continuing operations – Discontinued operations Previously Reported Unaudited 30 Sept 2012 R’000 Restated Unaudited 30 Sept 2012 R’000 (2 210) 2 292 (731) Adjusted Unaudited 30 Sept 2012 R’000 Unaudited 30 Sept 2013 R’000 Human Capital Development – Continuing operations – Discontinued operations Central Services Operating profit/(loss) Interest received Interest paid 93 682 93 682 93 682 93 682 93 682 93 682 Impairment of assets – discontinued operations 93 682 93 682 93 682 93 682 93 682 93 682 Share of profit/(loss) from associate 4,63 – 4,63 (4,26) – (4,26) 5,56 (0,93) – – 5,56 (0,93) 5,35 (9,61) – – 5,35 (9,61) 4,63 – 4,63 (3,05) – (3,05) 5,56 (0,93) – – 5,56 (0,93) 5,28 (8,33) – – 5,28 (8,33) Profit/(loss) before taxation Business segment total assets Human Capital Outsourcing Human Capital Development Central Services Total 16 893 13 794 (411) 1 591 (2 002) (6 924) 6 724 488 6 236 22 463 – 1 655 (7 870) – (7 870) 2 163 (508) – – 2 163 (508) (1 605) (6 265) – – (1 605) (6 265) – (2 923) (13 624) – (13 624) 2 292 (1 323) (2 923) – (2 886) (3 204) – Previously Reported Audited 31 March 2013 R’000 1 655 6 459 725 Restated Unaudited Adjustment 31 March 31 March 2013 2013 R’000 R’000 5 456 157 488 (747) (314) – – – 186 4 968 969 904 992 (2 572) – (186) (5 136) (1 203) – (731) (1 464) – (31) 1 723 (3 672) (1 203) 31 3 980 2 727 123 234 132 492 6 408 126 084 135 182 14 611 120 571 29 443 – 29 443 26 036 – 26 036 13 808 – 13 808 5 654 – 5 654 175 743 6 408 169 335 166 872 14 611 152 261 25 997 7 885 157 116 (387) 3 114 (4 378) 66 (4 444)
  3. 3. Condensed Consolidated Statement of Financial Position Condensed Consolidated Cash Flows as at 30 September 2013 for the six months ended 30 September 2013 Previously Reported Unaudited 30 Sept 2012 R’000 Previously Reported Audited 31 March 2013 R’000 Unaudited 30 Sept 2013 R’000 Restated Unaudited 30 Sept 2012 R’000 Non-current assets 44 140 (976) 50 000 44 701 (971) 45 672 6 367 73 6 294 4 086 64 4 022 Investment property 4 027 49 024 18 170 7 645 – 7 645 7 645 – 7 645 2 350 18 170 4 877 13 293 18 170 4 877 13 293 3 962 – 3 962 2 775 – 2 775 1 214 – 1 214 1 050 – 1 050 ASSETS Equipment and vehicles Goodwill Intangible assets Long-term receivables Investment and loan in associate Deferred tax asset Current assets Inventories Trade receivables Other receivables Cash and cash equivalents Non-current assets held for sale Total assets EQUITY AND LIABILITIES 7 645 1 050 – 10 898 112 976 1 193 100 813 5 785 5 185 – 157 116 Adjusted Unaudited 30 Sept 2012 R’000 Restated Unaudited Adjustment 31 March 31 March 2013 2013 R’000 R’000 Profit/(loss) before taxation 6 912 – (7 321) 7 321 11 666 – (6 912) 986 10 680 10 975 1 409 9 566 126 719 7 384 119 335 120 532 15 582 104 950 750 9 741 857 10 847 113 902 7 088 106 814 106 624 14 401 92 223 4 082 4 837 286 4 551 5 227 1 145 7 230 1 7 229 7 824 26 7 798 – – – 1 639 – 1 639 175 743 6 408 169 335 166 872 14 611 152 261 Equity 70 166 74 499 Non-controlling interest Current liabilities (4 742) 79 561 86 950 (3 754) (1 196) 10 615 90 629 100 609 18 365 82 244 4 830 44 563 6 448 38 115 43 823 9 551 34 272 Financial liabilities 33 962 101 244 1 170 5 369 – 5 369 5 031 – 5 031 46 988 1 363 102 1 261 1 180 14 1 166 157 116 49 949 4 065 45 884 50 575 8 800 41 775 175 743 6 408 169 335 166 872 14 611 152 261 93 682 93 682 93 682 93 682 93 682 93 682 93 682 84 71 Capital and reserves Trade and other payables Taxation payable Bank borrowings Total equity and liabilities Number of shares in issue at end of the period ('000) (net of treasury and share trust shares) Net asset value per share (cents) 74 908 75 Adjusted for non-cash items Operating cash flows before working capital changes Net working capital changes Taxation (paid)/received Cash flows generated by/(utilised in) operating activities – Continuing operations – Discontinued operations Cash flows generated by/(utilised in) investing activities – Continuing operations – Discontinued operations Cash flows from financing activities – Continuing operations – Discontinued operations Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period (5 062) 80 (4 207) – (4 207) (4) 78 706 66 263 79 561 71 213 (855) (4 950) (3 754) – (4) 70 017 71 213 75 Previously Reported Unaudited 30 Sept 2012 R’000 Previously Reported Audited 31 March 2013 R’000 Unaudited 30 Sept 2013 R’000 Cash and cash equivalents at end of period Restated Unaudited 30 Sept 2012 R’000 1 202 2 541 (573) 3 114 (4 347) 97 (4 444) 1 470 13 1 457 3 340 23 3 317 4 011 (560) 120 (1 127) 3 980 5 182 (4 944) (10) 228 (10 276) 59 Adjusted Unaudited 30 Sept 2012 R’000 (1) – Restated Unaudited Adjustment 31 March 31 March 2013 2013 R’000 R’000 4 571 (1 007) (10 275) (6 001) 59 (36) (5 313) – (688) (36) 1 158 (930) (6 206) (561) (5 645) (7 044) (5 193) (1 851) (4 851) (1 355) (561) – (4 290) (1 355) (7 000) (44) (5 193) – (1 807) (44) 76 845 (1 126) 1 269 (2 395) (1 207) 1 191 (2 398) (2 761) 1 635 1 269 – (4 030) 1 635 (1 195) (12) 1 191 – (2 386) (12) 921 (201) (201) – (40) – (40) (678) – (678) (40) – – – (40) – (678) – – – (678) – (42 751) (8 080) (8 929) (4 002) (4 927) (33 822) (4 772) (29 050) (33 822) (4 772) (29 050) (41 194) (4 064) (37 130) (42 751) (8 774) (33 977) 948 (41 803) (7 372) 708
  4. 4. COMMENTARY Profile Primeserv Group Limited is an investment holding company focusing on the delivery of human resources (HR) products, services and solutions through its operating pillar, Primeserv HR Services. This incorporates two main areas of specialisation: Human Capital Development operating as Primeserv HR Solutions; and Human Capital Outsourcing operating as Primeserv Outsourcing. Events after the reporting date Management is not aware of any material events which have occurred subsequent to the end of September 2013. Basis of preparation These divisions provide a comprehensive HR value chain that can be applied through Primeserv’s IntHRgrate™ Model in its entirety or in modular form. These divisions encompass an extensive range of HR consulting solutions and services, corporate and vocational training programmes, technical skills training centres, as well as resourcing and flexible staffing services, supported by wage bureaus and HR logistics outsourcing operations. The results for the Group for the six months ended 30 September 2013 have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (“IFRS”), the presentation and disclosure requirements of IAS 34 (as revised): Interim Financial Reporting, the Companies Act of 2008, the JSE Listings Requirements and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee. Except as recorded below, the accounting policies are consistent with those described and applied in the annual financial statements for the year ended 31 March 2013. The results were prepared by the Group Financial Director, Mr R Sack CA (SA). The results have not been reviewed or audited by the Group’s external auditors. Operating environment Adoption of new standard – IFRS 10: Consolidated financial statements The national economy remains vulnerable to both internal and external factors with the growth rate remaining sluggish and unemployment at very high levels. Overview of results As a consequence of the adoption of IFRS10: Consolidated Financial Statements, the results of Bathusi Staffing Services Proprietary Limited (“Bathusi”), previously accounted for as an associate company, have now been incorporated into the financial statements as a subsidiary company. The commentary presented below deals with Bathusi in terms of the new standard. The results for the six-month period under review show a return to overall profitability from the prior year loss of R4,3 million. Total revenue for the six months has decreased by 10% from R359,8 million to R322,9 million primarily due to the reduction in revenue attributable to the discontinued operation. Revenue attributable to continuing operations decreased by 6% from R341,1 million to R321,5 million. The gross profit from continuing operations has increased by 10% from R46,9 million to R51,4 million with the overall gross profit percentage from continuing operations increasing from 13,7% to 16,0%. This improvement is a consequence of improved trading with higher margin clients and the reduction in volume of some lower margin business which had benefited the revenue line whilst delivering less than optimal returns. EBITDA has increased by 11% from R6,9 million to R7,7 million with EBITDA from continuing operations improving by 37% from R7,1 million to R9,7 million. The EBITDA loss pertaining to the discontinued Colleges unit has increased over that of the comparable six-month period from a loss of R0,1 million to a loss of R2,0 million. The loss of R2,0 million relating to the final month of trading and discontinuance of the business must be seen in the context of the prior year loss of R9,0 million for the full financial year. The overall operating profit has increased by 18% from R5,5 million to R6,5 million with that from continuing operations improving by 42% from R6,0 million to R8,5 million. The net interest cost has reduced from a net cost of R2,7 million to a net cost of R2,5 million. Profit before tax has increased by 46% from R2,7 million to R4,0 million. Profit before tax from continuing operations has increased by 52% from R3,9 million to R6,0 million. Total comprehensive income attributable to shareholders of the Company has decreased from R4,3 million to R3,7 million. Earnings per share and headline earnings per share have decreased by 16% from 4,63 cents per share to 3,90 cents per share with earnings per share and headline earnings per share from continuing operations increasing by 9% from 5,56 cents per share to 6,04 cents per share. Trade receivables have decreased from R113,9 million at the end of September 2012 to R100,8 million at the end of September 2013. The average days sales outstanding (“DSO”) has improved from 55 days to 52 days for the period under review. Trade payables have decreased by R10,6 million from R44,6 million to R34,0 million. Cash flow from operations improved by R1,2 million from R4,0 million to R5,2 million, while cash invested in working capital improved from an outflow of R10,3 million for the comparable period to an outflow of R4,9 million in the current review period. Cash and cash equivalents turned around from an outflow of R7,4 million for the 6 months ended September 2012, to cash generated of R0,9 million for the current period. Human Capital Outsourcing Trading in the division was positive albeit that revenue decreased by 6% from R326,9 million to R306,0 million as a consequence of a change in client mix and the impact of industrial action in the motor industry over the course of August and September. Operating profit for the segment showed an improvement over the prior period. The DSO has improved from 54 days at the end of September 2012, to 49 days at the end of the current reporting period. Gross profit and profitability improved with certain low margin business reducing and being substituted with higher margin business. The trading across the blue collar unit was positive. The white collar unit delivered stable revenues in what remained a sluggish operating environment. IFRS 10: Consolidated Financial Statements, was issued in August 2012 and replaces the guidance on control and consolidation in IAS 27: Consolidated and Separate Financial Statements, and SIC 12: Consolidation – Special Purpose Entities. The Group concluded a BBBEE transaction in January 2005 whereby Bathusi was deconsolidated and thereafter accounted for as an associate company, in which the Group held 45% of the equity with the balance held by a number of BBBEE shareholders. The Group has determined that while it did not have control over the Company in terms of the principles of IAS 27, it does have control over the entity in terms of IFRS 10 given that the Group is able to control the activities of the Company and to earn variable returns. Consequently, Bathusi has been consolidated in the financial results of the Group. As required by IFRS 10, this change has been applied retrospectively and the comparative periods have been adjusted accordingly. Dividend No interim dividend is proposed for the period under review. The Group will consider the resumption of dividend payments at the close of its next reporting period. Outlook Ongoing focus on new sales and other growth and value enhancing opportunities should improve the Group’s trading performance. Any forward-looking statements contained herein have not been reviewed nor reported on by the Company’s auditors. On behalf of the Board JM Judin Independent Non-Executive Chairman 15 November 2013 Bryanston M Abel Chief Executive Officer R Sack Financial Director (“Primeserv” or “the Group” or “the Company”) Incorporated in the Republic of South Africa Registration number: 1997/013448/06 • Share code: PMV • ISIN: ZAE000039277 www.primeserv.co.za • e-mail: productivity@primeserv.co.za Directors: JM Judin# (Chairman), M Abel (Chief Executive Officer), Prof S Klein# (American), LM Maisela*, Independent Non-Executive * Non-Executive DL Rose#, R Sack (Financial Director), DC Seaton, CS Shiceka# Company secretary: ER Goodman Secretarial Services cc (represented by E Goodman) # Registered address: Venture House, Peter Place Park, 54 Peter Place, Bryanston, 2021 Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 (PO Box 3008, Saxonwold, 2132) The amendments to the Labour Relations Act in regard to Temporary Employment Service providers have been passed by the National Council of Provinces. It is therefore anticipated that the amendments will become law in 2014. Aside from an increased administrative burden, the amendments are not expected to have a material impact on the Group’s HR business. Direct employment is increasingly pressured due to ongoing weak economic conditions, resulting in a lack of new job opportunities, excessive wage demands and industrial action. These factors tend to favour the flexible labour solutions and integrated HR services offered by established and compliant providers such as Primeserv. Human Capital Development Revenue from continuing operations improved by 9% from R14,2 million to R15,4 million. The overall revenue values are not directly comparable due to the results of the discontinued Colleges operation being included for the full 6 months in the prior reporting period compared with a single month in the current review period. The Group disposed of its investment in the Colleges business with effect from 1 May 2013 thereby mitigating the losses and future operational risk from this unit. Operating profit from continuing operations has decreased by 26% from R2,2 million to R1,6 million due to project revenues being deferred while certain costs have already been expensed. This division continues to provide both strategic and profit-generating benefits to the Group. Auditors: Baker Tilly SVG, Third Floor, 3 Melrose Boulevard, Melrose Arch, 2076 (PO Box 61051, Marshalltown, 2107) (PO Box 355, Melrose Arch, 2076) Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd, The Woodlands, Woodlands Drive, Woodmead, 2196 (Private Bag X6, Gallo Manor, 2052)

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